Summary
This outlines the minimum surplus income requirements for applicants seeking to purchase a shared ownership home through Portsmouth Homes.
It ensures that all applicants have sufficient financial stability to meet their housing costs and other living expenses to have a good quality of life. Whilst ensuring the shared ownership applications are managed effectively in accordance with relevant regulatory and statutory guidance. It is designed to provide a set of principles and a framework to manage the minimum amount of surplus income an applicant for shared ownership should have available per month after accounting for all their housing costs, other commitments and expenditure as established by a budget planner.
This will apply to every application for a shared ownership home, ensuring we implement supporting documentation and a fair and consistent approach is operated throughout the business.
Process
Applicants should be encouraged to purchase as large a share as is suitable based on their individual circumstances and affordability, taking into consideration any known or foreseeable changes in the future. Under no circumstances should any applicant be made or encouraged to overcommit themselves financially, however the lowest share able to be purchased will be the share that is on offer for resale.
The share level being purchased must be suitable for the applicant’s affordability and needs as evidenced by the mortgage advisor.
The recommended minimum surplus income requirements are based on each individual or household having at least 10% of their net monthly salary remaining after commitments and housing costs, however this will be assessed on each individual circumstances.
Minimum surplus income requirements
This policy applies to each applicant/household
- Sole applicants
- Couples
- Families
- Applicants requiring care (The 10% rule will be applied to include all current and anticipated future care costs).
Calculation of Surplus Income
Surplus income is calculated as follows:
Surplus income:
- Net Monthly Income
- Housing Costs
- Essential Living Expenses
- Care Costs
Net Monthly Income: Total monthly income after tax and other deductions.
Housing Costs: Includes rent, mortgage payments, service charges, and insurance.
Essential Living Expenses: Includes utilities, food, transportation, childcare, medical care and any other essential expenses.
Verification Process
Applicants will be required to provide detailed financial information to your Mortgage Broker who will support you through the eligibility and affordability process to assess your surplus income and provide us with a full report.
Review and Exceptions
In exceptional circumstances, applicants may request a review of their surplus income requirements. This will be considered on a case-by-case basis, particularly for those with fluctuating incomes or extraordinary expenses.
We will review this guidance every two years or when there has been an update to legislative, regulatory, best practice or operational changes.
For more information, please contact the team on 023 9282 2251 or Leaseholder@portsmouthcc.gov.uk